Bank Of Italy Models Ethereum Risks If ETH Value Collapses 2026 - Guide
The Bank of Italy modeled the extreme scenario of Ether going to zero to show how market risk in Ethereum’s native token could turn into infrastructure and financial stability risks.
The Bank of Italy modeled what would happen to Ethereum’s security and settlement capacity if the price of Ether fell to zero, treating the network as critical financial infrastructure rather than just a speculative crypto asset.
In a new research paper titled “What if Ether Goes to Zero? How Market Risk Becomes Infrastructure Risk in Crypto,” Bank of Italy economist Claudia Biancotti examined how an extreme price shock in Ether (ETH) could affect Ethereum‑based financial services that rely on the network for transaction processing and settlement.
Biancotti focused on the link between validators’ economic incentives and the stability of the underlying blockchain used by stablecoins and other tokenized assets.
The paper models how validators, who are rewarded in ETH, might respond if the token’s price collapsed and their rewards lost value.
In that scenario, a portion of validators would rationally exit, Biancotti argues, which would reduce the total stake securing the network, slow block production and weaken Ethereum’s ability to withstand certain attacks and guarantee the timely, final settlement of transactions.
Rather than treating Ether purely as a volatile investment, the study frames it as a core input into the settlement infrastructure used by a growing share of onchain financial activity.
Related: Stablecoin risks seen as minimal in Europe amid low adoption and MiCA: ECB
Biancotti argues that Ethereum is increasingly used as a settlement layer for financial instruments, so that shocks to the value of the native token could diminish the reliability of the underlying infrastructure.
This framing allows the Bank of Italy to trace how market risk in the base token could morph into operational and infrastructure risk for instruments built on top, from fiat‑backed stablecoins to tokenized securities that depend on Ethereum for transaction ordering and finality.
Source: CoinTelegraph
